At Dotch Capital, our mindset is "FIND THE PROBLEM AND THE SOLUTION" to help business owners address their financial needs at every stage of the business life cycle. Taking into account their values, financial needs, and goals, we specially design a simple package to help entrepreneurs meet thier objectives. Some of our specially designed, simple package ideas include:
Executive Bonus Arrangement
Concept applied: An executive bonus (IRC Section 162) plan provides businesses with a way to use tax-deductible funds to selectively provide valuable benefits to critical, key employees (and business owners when business owner's Effective Marginal Tax Rate is lower than the C-corporation's). These benefits usually include cash value life insurance that can be used to supplement retirement income.
Non-Qualified Deferred Compensation
Concept applied: A non-qualified deferred compensation arrangement allows an employee to reduce current salary and future bonuses in exchange for future income. An employer can provide retirement income and often death and disability benefits to an exclusive employee group, often with benefits in excess of those permitted under qualified plans. The business owner can also take advantage of these benefits, however, the entity must be a C-corporation.
Split-Dollar Life Insurance
Concept applied: Employers use split-dollar to buy life insurance as a valuable fringe benefit for key employees. Family businesses use this arrangement to benefit: (1) family members or (2) a trust established for the family’s benefit.
Family One-Way Buy-Sell & Bequest
Concept applied: Business-owner parents want the family business to go to one child, while also providing legacy benefits for their other children. Since the owners’ assets are concentrated in the business, it may be difficult to provide for the other children. One solution is to gift, loan, or bonus funds to the business-successor child to pay premiums on a policy on the parents to fund a buy-out arrangement that can then put cash in the estate for the other children.
Concept applied: Business owners typically want to provide for all of their children at death, but choose to leave the business itself to the children most suited to running it. One strategy to accomplish this is for the business owner-client to leave the business equally to all of the children and arrange a buy-sell agreement among the children that is funded with life insurance on the parent’s life that will provide the cash to transfer the business to the selected child or children.
In business, every employee matters, and no office can be expected to run smoothly without administrative staff, managers, nurses, assistants, and others. This team is what keeps your clients happy, schedules filled, and priorities in order. Benefits make your employees want to stay with your practice, and benefits such as dental and medical insurance and retirement savings plans motivate them to stay. Together we will decide which benefits are best for your company and how they should be implemented according to your company goals.
Key Person Insurance
Key Person Life Insurance is designed to protect a business from losses associated with the death of an owner or a "key" person to the company. The amount of insurance typically owned by the firm covers the cost of hiring and training a replacement for the deceased, as well as lost profits. Key Person Life Insurance can be used with any form of business when the loss of an individual would cause severe financial hardship to the company.
A buy-sell agreement is a legally binding contract between co-owners of a business. It controls a situation where a co-owner dies or leaves the company, whether by force or by choice. A funded cross-purchase buy-sell plan uses life insurance to help ensure that the arrangement is properly funded.
Business Owner SLIRP Strategy (BOSS)
Supplemental life insurance for retirement planning is a superb strategy for business owners. This concept involves the owner purchasing a cash accumulation, which is a permanent life insurance policy with after-tax dollars. Over time, the plan will generate cash values that can be accessed on a tax-free basis during retirement while providing asset diversification and reducing exposure to business risks.
Cash on the Balance Sheet (COTBS)
Successful businesses typically maintain significant cash reserves, which are generally subject to low-interest rates and income taxation. By repositioning some of this cash into a permanent life insurance policy, the business can see tax-deferred growth that exceeds the returns of other cash alternatives over the long term, and a tax-free death benefit that could help meet different business needs such as key person insurance and buy-sell funding.
Retirement and Legacy Arrangement (RALA)
RALA is an innovative strategy designed to address multiple wealth planning objectives without the need to gift the annual premium. If properly designed, funded, and maintained, you can retain control over the permanent life insurance policy and cash value to supplement retirement income and create an income and estate tax-free legacy for heirs.